Bank Statement Loan
Bank Statement loans are designed for self-employed homeowners or prospective homeowners that would
benefit from qualifying for a loan using alternative income documentation. For traditional mortgages, a self
employed homeowner must submit tax returns for income qualification purposes. With a Bank Statement loan,
tax returns are not required. Instead, the self-employed borrower qualifies based on the average business
related deposits using 12 or 24 months of personal or business bank statements
Understanding
Bank Statement Loans
Because W2s and Tax Returns are not used in Bank Statement mortgage
loans, Personal Bank Statements and/or Business Bank Statements are
reviewed whereby business-related deposits into the respective accounts
are reviewed to evaluate the borrowers ability to pay back the loan
Bank Statement Loan Requirments:
- Credit Score 620 or higher
- Loan to Value (LTV) up to 90% for purchases or rate/term refinances, 80% for cash-out refinances
- Loan amounts up to $3M
- Debt to Income ratio (DTI) up to 50%
- Prior bankruptcies or foreclosures allowed after 12 months
- Generally, no more than one 30-day late payment on mortgage/housing in the past year (more may
be considered with restrictions) - Minimum reserves as low as 3 months
Bank Statement Loan Benefits :
- Interest Only loans available, including a 40-year term (first 10 years interest-only
- No tax returns required
- Non -Self-Employed income can qualify (e.g. co-borrower employment income, retirement income)
- LLC, Partnership, or Corporation can hold title for rental properties
- No limit on the number of properties owned
- Cash-out refinances may be eligible for properties owned less than 6 months
- ADU rental income may qualify (subject to requirements)
- Gift funds allowed for down payment if the borrower provides at least 10% of their own funds
- Short-term rental income (Airbnb, VRBO) can be used with restrictions
- Cash-out proceeds can be used to meet reserve requirements
- Only the primary wage earner’s credit score is used for qualification
- Rental income qualified via lease agreements or appraiser’s market rent (no tax returns required
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